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Driving BMW

Chairman Bernd Pischetsrieder Is Aggressively Turning the German Automaker Into a World Player

by Paul A. Eisenstein

There's something about the goatee. And the coal-fire eyes. The cigar and the thick Bavarian accent couldn't have offered much cover, either. But there was Bernd Pischetsrieder and his trusty sidekick and nuclear physicist Helmut Panke, tooling through the Deep South in a rented minivan. No dueling banjos for these good old boys. Just a contract worth a half billion dollars. Maybe more.

It was "Get Smart," rather than "Mission Impossible." It began back in 1992, when BMW's young, soon-to-be-chairman decided on a fateful step that would forever alter his company. Fed up with the ever-rising demands of German unions and determined to transform an essentially regional carmaker into a truly global player, Pischetsrieder was intent on opening Bayerische Motoren Werke A.G.'s first full-scale foreign assembly plant. As its number one overseas market, the United States was the logical location. And in the battle for foreign "transplant" assembly lines, Southern politicians were falling all over each other to offer bigger and better tax breaks and land deals. But Pischetsrieder knew it would take more than money. He had to avoid a clash of cultures. So, Pischetsrieder led a top-secret team on a mission to the birthplace of the Confederacy. Pischet and Panic, they took as their noms de plume. "We had to take names we could stick with," says the 48-year-old Pischetsrieder, eyes twinkling at the image of himself going "undercover."

With a map of potential plant sites to guide them, the team rolled through backwoods villages and fast-growing cities, comparing living conditions, checking transportation routes and making notes on the occasional bratwurst house. Back in Germany, they crunched their numbers, checked their guts and threw a dart at the map that landed just outside Spartanburg, South Carolina. In November 1994, BMW's new plant went into operation. Today, it is the automaker's only source for the much-in-demand Z3 roadster.

Pischetsrieder's penchant for planning is matched, perhaps, only by his need for secrecy. Maybe it's a talent developed innately growing up at ground zero in the Cold War. At times, he runs his company like a spy ring from a LeCarre novel. Consider this Baby Boom visionary's other big coup, the stunningly unexpected acquisition in 1994 of Britain's last independent automaker, the Rover Group.

"He divided the company up into cells," recalls Panke, trained in nuclear engineering, later BMW's head of strategic planning and now in charge of its North American operations. Pischetsrieder was the only man at BMW who totally knew the company's intentions. "That way, no one knew too much," Panke says. Certainly not the press. There wasn't a single rumor. Nor did anyone suspect a thing at Honda, the Japanese company that thought it had formed a limited partnership with Rover. Pischetsrieder notified Honda's chairman personally, just as the deal was completed snatching Rover away.

This fall, Pischetsrieder pulled off another coup in virtual secrecy when BMW and Chrysler Corp. announced plans for a $500 million joint venture to build 400,000 four-cylinder engines a year in South America. If the deal goes through, as expected, Rover stands to become more competitive in the small-car market.

Who is this brash young man so intent on reshaping not just his own company, but the auto industry as a whole? By conventional terms, Bernd Pischetsrieder wouldn't qualify to run a German company. There is, after all, no "Herr Doctor" at the beginning of his business card. No advanced degree in engineering. Not even an MBA. But to listen to the growing legion of fans and admirers, Pischetsrieder is proving himself the most qualified executive in Germany.

"Unexpected, unconventional, brilliant," is how Automobile Industries described Pischetsrieder, the magazine's 1995 Man of the Year. Indeed, "brilliant" is a word one hears over and over again when you seek a thumbnail description. Pischetsrieder is, after all, someone who'll curl up after a long day at the office to read philosophy in the original Greek or Latin. But if it's winter in the Bavarian Alps, he's just as likely to be found on a snowboard, racing down the slopes with the same, sometimes reckless, abandon he can show behind the wheel.

He is a man not without contradictions, an insular Bavarian with a decidedly world view. A man whose company espouses the ultimate in individual mobility, even as Pischetsrieder personally presses for the development of automated highways and robotic cars. About five years ago as head of manufacturing, he declined to let BMW participate in a groundbreaking study of the auto industry by the Massachusetts Institute of Technology. "We already know what they've learned," he said of the results, published in book form as The Machine That Changed The World. Minutes later, confronted by nearly 100 copies of the book stocked on the coffee table outside his office, a nonplussed Pischetsrieder explained simply, "Good Christmas presents for my staff." Now, some years later, Pischetsrieder is relaxing in one of the three dining rooms at BMW headquarters, a cluster of silver towers that dominate the Munich skyline and cast shadows across the fields and stadiums left from the city's ill-fated 1972 Olympic Games. He is deboning a small fish, a process he delves into with the same relish and precision as a big business deal.

Pischetsrieder's liquid eyes are impossibly dark, blazing with wit and whimsy. His posture is ramrod straight. His refined manners speak of old-money upbringing. The auto industry, Pischetsrieder confides, was the last place he ever imagined himself working. Instead, he thought himself an entrepreneur in the making. But there were some automotive connections in the family, most notably his uncle, Alex Issigonis, designer of the legendary Austin Mini, a car so compact it could nearly fit into the trunk of a BMW 750i. The half-Greek Issigonis hails from one branch of this multinational clan. Pischetsrieder's own dark, Arabian good looks come from his mother's roots in a region of what is now Turkey, a place the family hurriedly fled from after the First World War.

Bernd Pischetsrieder and his sister, "an ordinary housewife," he says without disrespect, grew up in a Munich just digging out from under the rubble of the Second World War. It was a frenzied time. BMW was so desperate to be back into production, it started stamping out pots and pans with the same presses used for Wehrmacht helmets. Another company obtained some leftover fighter cockpits, putting them on wheels under the name Messerschmitt Cabin Rollers.

The Pischetsrieder household was prosperous enough to spare the children the worst of the postwar hardships. Pischetsrieder's father created a successful Munich advertising agency. The young Bernd attended a "humanistic gymnasium," the German term for a strictly formal school that emphasizes classical knowledge. There were nine years of Latin and six of ancient Greek. English was mandatory, and Pischetsrieder added French and Italian to his curriculum as well.

Considering his love of learning, it might seem a surprise that Pischetsrieder doesn't have that Ph.D. attached to his name. But BMW derailed his formal education. After getting his bachelor's degree, he "joined BMW [only] for a year or so to get some practical experience," he once confessed to an interviewer. His goal was to use that experience to "go on to be an entrepreneur. I wanted to start either a small factory or an engineering service that would be research related." At BMW, he wanted to work in quality control, but they made him assistant manager of the Munich plant instead. BMW persuaded Pischetsrieder to stay on rather than return to school, and to keep him happy, the company rolled out the first in a series of challenging assignments. By age 26, the once-reluctant executive was running the operations control department at the Munich factory. His involvement in labor negotiations taught Pischetsrieder the difference between "can't-do" compromises and "win-win" scenarios. It also helped him understand that the traditional Germanic form of top-down "communication" wouldn't work for much longer.

Bernd Pischetsrieder is no New Age guru. Bottom-up empowerment is fine in its place. "The eye of the owner lets the wheat grow," he says Teutonically, an old German proverb readily at hand. "In a large organization, the presence of management is needed, not just the physical presence, but in the mind." That doesn't mean top-down management, though.

"It's a bit of both. The art of management can't be anything but communication." Any other approach is "a recipe from the last century," Pischetsrieder says with conviction. "When I'm anywhere but my car, I'm talking to people." As a result, you're as likely to find him today wandering through the silver BMW towers or at the nearby technical center, known as FIZ, as you are in his office. "Most people think communication is what happens when they talk. I think communication is when you have an exchange of information with others. At the end of the day, you have to know who you can trust, and you'll never know that through a memo."

Smart, open to new ideas and challenges, Pischetsrieder was clearly the man on the move. In 1982, his big move was to South Africa to take charge of the company's beleaguered operations in the apartheid-torn nation. Returning to Germany three years later, Pischetsrieder finally got the assignment he'd joined the company for, but by this time, he was put in charge of all quality assurance. The climb continued. In 1987, he was appointed head of technical planning, and in 1990 Pischetsrieder was posted to the all-powerful BMW Board of Management, with responsibility for production. At 45, an age when the brighter of his schoolmates might just be climbing out of middle management, Bernd Pischetsrieder was named chairman. Asked why, his predecessor, the imperious Eberhard von Kuenheim, declared Pischetsrieder "the most appropriate."

It wasn't a backhanded compliment. For his own part, Pischets-rieder suggests "I was the best fit for our corporate culture." To which he adds, somewhat cryptically, that among the potential candidates, he had the "wide[st] span of potential."

David Cole, director of the University of Michigan's Office for the Study of Automotive Transportation, says there was no question Pischetsrieder was the right one for the job. "Germans tend to work inward, but he looks outward and sees the world for what is really going on. He's really turned BMW into a much more agile, flexible company than they have been historically. And it has put the heat on Mercedes."

Traditionally the smaller of the two automakers, BMW has vaulted past its crosstown rival thanks to the success of such models as the Z3, the 750 and the 3-Series "Yuppie-mobiles." Last year, the Bavarian automaker sold 592,838 automobiles around the world compared to 583,432 for Mercedes-Benz. The embarrassing turnaround has shaken staid, Stuttgart-based Mercedes, which has been racing to reshape its lineup to create a wave of driver enthusiasm. Its new SLK aims head-on at the Z3. In 1997, Mercedes Benz will open its own U.S. assembly plant, near Tuscaloosa, Alabama. Perhaps not so coincidentally, that factory will produce the AAV, short for all-activity vehicle. This high-end sport-utility vehicle will take on the upscale all-terrain products of BMW's Rover subsidiary.

To devotees, BMW aptly describes itself as "The Ultimate Driving Machine." It's not for those who want the traditional American "boulevard ride." These are taut and nimble automobiles demanding your active involvement in the driving process.

That's why it seems to some such a paradox to find Pischetsrieder actively involved in Europe's massive Project Prometheus. A consortium of European automakers, universities and government agencies, the project was launched in an effort to overcome the gridlock that grips cities from Munich to Stockholm. Already, a continent-wide navigation system is falling into place. One option on BMW's 750iL is an in-dash mapping system: punch in your destination and it will plot out a route. In some cities, the system can even display traffic updates, informing drivers how to detour around congestion. But the ultimate step, some experts believe, is a totally autonomous car. Drive onto the Autobahn, tap a key on the dashboard and lie back for a snooze as your car hurtles towards its destination automatically.

One thing is certain. Don't expect to see Pischetsrieder handing over control of his own car. He has a passion "alternately for fast cars or old," and he has turned some fast ones into old wrecks, such as the McLaren that he rolled off a highway last year. Though everyone on board walked away with no more than minor scrapes, there wasn't much left of the Autobahn-burner. A generous charitable donation, not only legal but encouraged under German law, and the polizei found no reason to issue a ticket.

How fast was he going? The official report suggested 120 kilometers per hour, about 75 miles an hour. "I have nothing more to add to that," Pischetsrieder says, struggling not to crack a smile. For a better idea, consider that he drove a replacement McLaren on the track at LeMans last June, just before the start of the annual 24-hour race. "But I made sure no one saw me," he says, because after the accident, "pictures would be quite valuable."

Pischetsrieder has three speeds: fast, faster and mach schnell. whether he's on four wheels, two, or a dangerously short slab of wood. He's been snowboarding for nine years. "When I started, no one knew what that piece of wood was all about. Now, it's so popular with the kids, I'm like their grandfather." He is serious enough about the sport that he'd like to compete--if only there were more boarders in his age class. When there's no snow on the ground, Pischetsrieder remains active--mountaineering, windsurfing or riding one of his BMW mountain bikes. There's also a half-hour morning jog Pischetsrieder describes as his "early-morning brainwash."

Of course, he does have some more sedentary pursuits, such as reading Plato and Socrates, sipping a good Cognac and enjoying a good cigar, the latter being one of the legacies of his South African assignment. Up until then, Pischetsrieder had been an avid pipe smoker. But the African air was too hot and dry and the pipe tobacco burned too harshly. Gratefully, he discovered that there were always plenty of Cohibas, even when they were in short supply elsewhere in the world. For Pischetsrieder, cigar smoking quickly became both a passionate and intellectual pursuit. "A heavy cigar on a rainy Sunday morning after a traditional British breakfast, is just right. On another day, another mood, I'll prefer a light one." The taste of victory in the Rover takeover is firmly linked in his mind to the taste of the Dom Perignon he lit up at the corporate retreat, the Restaurant Residenzin Aschau.

Pischetsrieder cultivates his sources in search of rare cigars; he has standing orders with several of London's top dealers. "The real goal is to find an old cigar, and I'm not talking six months," he says, savoring a rare after-lunch Partagas 898. "I'm talking 10 years, because the taste gets better. New cigars have a greenish taste because they're so fresh." A dealer in Munich recently scored two handsome boxes of aged Hoyas, "better made than average and in a chest that resembled a jigsaw puzzle." Pischetsrieder also has an unopened chest of 100 Montecristo Special Selections from 1958 that was produced only for Alfred Dunhill in London.

His growing collection of about 5,000 cigars at his Munich home includes some 20-year-old Partagas 898s--even a few pre-Castro Cubans and Dom Perignons. "You always hesitate to smoke them," he says wistfully. "But after all, that's why they were made." Besides, Pischetsrieder adds with that Turkish twinkle flashing, "I don't believe in leaving all funds to my heirs. I would rather enjoy smoking one with my son today."

Unlike many of his colleagues and fellow cigar aficionados, Pischetsrieder, who is married and has two children about whom he's as secretive as future business deals, claims no set cigar routine. "I have so many different cigars and always like a change." His favorites are Dom Perignon, Hoya de Monterrey Double Corona, Partagas 898 and Romeo y Julieta Belicoso. He derides anything smaller than a corona as lacking in taste. Surprisingly, until now, the vast Pischetsrieder tobacco collection has been stored humbly, in a cupboard, with no temperature control, though he is able to maintain humidity at a steady 70 percent. Almost apologetically, Pischetsrieder admits he's finally placed an order for a customized humidor, which he recently had shipped from the United States.

There's little left of his 898. Dusting the ash, he rises from the table. He's off to a photo shoot, then it's back to the office. Bernd Pischetsrieder has a lot more communication to conduct before the end of the day. BMW is no longer a little Bavarian company. It's a global enterprise with the inherent payoffs, and risks. Indeed, there are plenty of skeptics betting the big Rover deal will ultimately go bust. And the Spartanburg plant has its own problems. Quality control has been below expectations and production rates remain well behind schedule.

But Pischetsrieder's confidence level is as rigid as his posture. Running an auto company is normally an old man's game. After five or six years at the helm, you're worn out, ready to fall over. But by the time Pischetsrieder would reach mandatory retirement age, he'll have put in nearly 20 years on the job. Doesn't he ever burn out?

Certainly not yet. And not in the foreseeable future. "I don't ever see a reason to slow down," he says, the jet-black goatee finally breaking into a grin. Pischetsrieder does like to "cut off" when he returns home to the Bavarian hills each night. He'll "watch the birds and the mountains for 20 minutes. That's enough." Then it's time to start thinking about his next big move.

Paul A. Eisenstein runs The Detroit Bureau, an independent automotive news service.

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